US Senate postpones debt limit talks

US senators have delayed a crucial vote on a bill to raise the country's debt limit ahead of Tuesday's deadline.

It has been put back till 6pm tonight, but the final vote could come as late as tomorrow afternoon after financial markets open.

President Obama has been holding last-minute talks to stop the country running out of money as the Democrats and Republicans still cannot agree on a compromise.

US senate majority leader Harry Reid said in a brief statement on the Senate floor that many parts of the potential pact remain to be worked out.

"There are many elements to be finalised,'' Mr Reid cautioned. ``There is still a distance to go.''

President Barack Obama is seeking legislation to raise the government’s 14.3 trillion US dollar debt limit by enough to tide the Treasury over until after the 2012 elections.

He has threatened to veto any legislation that would allow a recurrence of the current crisis next year but has agreed to Republican demands that deficits be cut – without tax increases – in exchange for additional US borrowing authority.

Without a compromise in place by Tuesday, administration officials say the Treasury will run out of funds to pay all the nation’s bills.

The subsequent default could prove catastrophic for the US economy by causing interest rates to rise and financial markets to sink, sending shockwaves around the world, they say.

With financial markets closed for the weekend, politicians had a little breathing room, but not much.

Asian markets begin opening for the new work week when it is late Sunday afternoon in the US capital.

“There is very little time,” Mr Obama said in his weekly radio and internet address.

He called for an end to political gamesmanship, saying “the time for compromise on behalf of the American people is now”.

Senate Republican leader Mitch McConnell said at a joint news conference with House Speaker John Boehner earlier in the day that he was confident a deal could be reached “in the very near future and resolve this crisis in the best interests of the American people”.

Mr Reid, after a meeting at the White House with Mr Obama and House Democratic leader Nancy Pelosi, disagreed with that optimistic assessment.

Mr Obama needs Congress to approve an increase in the government’s borrowing authority, known as the debt ceiling.

Past increases have been routine, but Republicans, citing the giant US deficit, have demanded huge spending cuts as a condition for approving the increase.